Chris Blackhurst: A nation of shopkeepers got to taste the difference when Justin King took charge of Sainsbury's
Midweek View: He was in the vanguard of the new breed of egalitarian bosses: out went the pinstripes - titles were banished
As he steps down as chief executive of Sainsbury's, the supermarket group he has led for a decade, Justin King is entitled to pat himself on the back. Job well done.
Okay, his final results are not the sexiest he hoped to have produced. But they're still a darned sight better than anything coming out of Tesco or Morrisons at the moment.
Time flies, and I have to pinch myself: is it really 10 years since I first met King in Sainsbury's spanking new Holborn Circus headquarters? They seemed to go hand-in-hand, the youthful CEO with a seemingly permanent smile and an easy manner, and the gleaming steel and glass, open-plan offices. The contrast between this and the previous era, where visitors to the old head office were greeted by the sight of limousines and chauffeurs waiting to bear one of the senior members of the Sainsbury family away, was stark.
King was in the vanguard of a new breed of egalitarian British retailing bosses (and as we're a nation of shopkeepers still, a new breed of British corporate chief). Disappearing were the toffs, with their urbane, patriarchal bearing. In their place was a new breed – non-boarding school, from the grammar and the comprehensive.
Out went the heavy pinstripes and double cuffs, in came light two-piece suits and light shirts. With a tie or without? They didn't mind – it depended on how they felt.
Titles were banished. No longer did you hear "Mr", "Sir" or "Lord" but a first name. So it became "Justin" at Sainsbury's, "Terry" at Tesco, "Richard" at Boots, and "Allan" and "Adam" at the Post Office.
One of King's first acts on taking over was to implore shoppers and staff around the branches to "tell Justin" of their ideas and problems. Such a move is taken for granted now, but back then it was still regarded as a bit too matey and touchy-feely for the old guard's liking. King was an Everyman, to be one of the workers, to talk numbers with the City, to hob-nob with the media, and to lobby at Westminster.
It was no use King sitting atop a glass tower in central London. He made it his business to get out there, tour the shops, wander down the aisles, check out the opposition, even man the tills and stack shelves, to talk to the staff, customers and suppliers. Above all, to listen, and to respond.
He took over from Sir Peter Davis. Memories are short where the City is concerned, and it's forgotten now that Davis was regarded as the great hope for Sainsbury's when he became chief executive in 2000. Sainsbury's was on its knees, humbled by the aggressive, all-conquering Tesco. Davis, a public-school smoothie who eschewed university and went into an engineering firm at 17, was seen in the City as just the sort of person Sainsbury's required.
Part of Davis's popularity stemmed from the fact that when he quit engineering and went into marketing, and rose through the ranks at Sainsbury's to be within touching distance of the summit, he was told he would never make it. The CEO post went to David Sainsbury, and Davis left, to run Reed, then Prudential.
Meanwhile, back at Sainsbury's, David had handed over the reins to Dino Adriano. It was a disastrous period for the group – the once seemingly invincible Sainsbury's had to concede the number one slot to Tesco.
Davis, who had been cold-shouldered by his former colleagues after leaving, not once invited back for any kind of Sainsbury's social gathering, was asked if he'd liked to rejoin – in the job he was told he would never get.
He rang the changes: launching the Taste the Difference range; revamping advertising; bringing in Jamie Oliver; cutting prices; improving distribution, an area where Tesco had been making huge inroads; offloading non-core activities such as DIY with Homebase; pulling out of North America; going into clothes and discounting of electrical goods.
That's quite a list, but it was not enough. Sainsbury's slipped to third in food retailing behind Tesco and Asda, and faced being squeezed by Morrisons, which had absorbed Safeway.
Davis, a genial, intelligent, decent (too decent, said his critics) man, fell out of favour with the City. Progress was felt to be too slow. He moved up to chairman, and eventually out completely, but not before he chose his successor as CEO: Justin King, the head of Marks & Spencer's food division. The Tigger-like King picked up where Davis left off, but at a much faster pace. Sainsbury's had three profit warnings in 2004. King's reaction was to launch a three-year turnaround plan, "to make Sainsbury's great again".
As well as writing to a million customers and staff, asking them what they wanted and what could be improved, King cut costs (750 jobs went at the head office alone), scrapped a £3bn IT project that was going nowhere, speeded up the branch-opening programme, especially in convenience stores, redoubled the pursuit of quality with the Taste the Difference and Be Good To Yourself lines, renewed Oliver's contract (after there was much speculation that he would be dropped), and switched the advertising slogan from "Making life taste better" (or "bitter" as the cynics claimed), to "Try something new today".
King took Sainsbury's, which had become a byword for inefficiency – for not having a product that someone wanted, when they wanted it, and consequently losing that customer to Tesco, which did have it – and gave it a good shaking. Whereas Tesco went down the competitive, slick, well-organised route – arguably to the detriment of the shopping experience – Sainsbury's somehow pulled off the trick of boosting its logistics without losing intimacy. It's a friendlier, warmer place to shop than Tesco. And, King has ensured, its premium products match Waitrose and M&S for quality.
He deserves the plaudits. For beginning the transformation, Davis merits recognition, too.
The baton now passes to Mike Coupe, King's long-time lieutenant. Can Coupe cope? Apologies for the rampant alliteration, but it is the question that the City wants to know.
My bet is that he can. Sainsbury's management is handily placed, not beset by the distracting in-fighting engulfing the higher echelons of Tesco and Morrisons. They can focus on further improvements to an express store network that is already humming. There's all to play for in online, where King has left them in good shape – although in click-and-collect groceries Sainsbury's lags far behind Asda and Tesco. Brand Match came late in King's reign, but is a strong initiative, at last making Sainsbury'sCoupe must push for profitability. When King took charge, Sainsbury's operating margin was a lowly 2.15 per cent. He took it to 3.56 per cent. But that remains some distance behind Sainsbury's rivals, and King can be accused, rightly, of putting volume ahead of margin. Currently, by contrast, Tesco's operating margin is 4.14 per cent.
He inherits, however, a chain that is in far better health than when King took over. King deserves enormous credit – even if, frighteningly, his arrival only seems like yesterday.
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